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Rule v. Southern Industrial Mechanical Maintenance Co., L.L.C.

United States District Court, W.D. Louisiana, Shreveport Division

July 3, 2019





         Before the undersigned Magistrate Judge, on reference from the District Court, is a motion for leave to file second amended complaint [doc. # 122] filed by plaintiffs Shannon Rule and Karina Esquivel, et al. The motion is opposed. For reasons assigned below, the motion is granted-in-part and denied-in-part.[1]


          On October 7, 2016, Shannon Rule and Karina Esquivel filed the instant collective action under the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201, et seq., individually, and on behalf of all other similarly-situated current and former employees of Southern Industrial Mechanical Maintenance Company (“SIMMCO”) for unpaid wages, overtime, liquidated damages, attorney's fees, and costs. (Compl., ¶ 1). Specifically, plaintiffs allege that they were hourly, non-exempt employees entitled to overtime pay under the FLSA, but that SIMMCO failed to include their per diem amounts in their regular pay when calculating and paying overtime. (Compl., ¶¶ 10-12). Plaintiffs contend that because SIMMCO's per diem policy was tied to the amount of hours worked and subject to reduction on an hourly basis, the per diem must be included as a component of their regular rate of pay for purposes of overtime. Id. (citing Newman v. Advanced Tech. Innovation Corp., 749 F.3d 33, 38 (1st Cir. 2014)).

         On December 30, 2016, plaintiffs filed a motion to conditionally certify a collective action and to authorize notice to prospective parties. [doc. # 12]. On March 6, 2017, the undersigned recommended that the motion be granted, as revised. (March 6, 2017, R&R [doc. # 22]). On April 24, 2017, the District Court adopted the report and recommendation and conditionally certified the collective action. (April 24, 2017, Order [doc. # 45]).

         On June 14, 2017, the court granted plaintiffs leave to amend their complaint to join SIMMCO's officers/owners, David Blurton and Ginger Blurton, as additional defendants. See doc. #s 73, 84-85. On February 12, 2018, SIMMCO filed in the record a suggestion of bankruptcy. [doc. # 108].

         For almost one year, plaintiffs and the Blurtons did nothing to advance the case for trial until the District Court prompted them by convening a January 7, 2019, status conference. See doc. #s 109-110. At the conference, plaintiffs reaffirmed their interest in pursuing their claims against the Blurtons. Accordingly, on January 22, 2019, the undersigned held a scheduling conference and issued a new scheduling order. [doc. #s 112-114].

         On February 19, 2019 - more one and one-half years after joining the Blurtons as defendants -- plaintiffs served each with their initial interrogatories and requests for production. (Interr. & Reqs. for Prod.; M/Compel, Exh. C). On March 21, 2019, the Blurtons responded to plaintiffs' discovery requests. (Defs. Resps. to Interr. & Reqs. for Prod.; M/Compel, Exh. D On May 7, 2019, plaintiffs filed the instant motion for leave to amend their complaint to add the following defendants: (i) former SIMMCO Project Manager David Payne; (ii) former SIMMCO Human Resources Director Vanessa Carrasco; (iii) former SIMMCO Superintendent Randy Sawdey; (iv) former SIMMCO Safety Director Tom Pegram; (v) “Southern Industrial Mechanical Maintenance Company II, ” or SIMMCO II, a successor company to SIMMCO; and (vi) The Blurton Group, L.L.C., a joint employer of plaintiffs.

         On May 20, 2019, the Blurtons filed their opposition to plaintiffs' motion, in which they argued that the proposed amendment was untimely and futile. [doc. # 133]. Plaintiffs filed their reply brief on May 24, 2019. [doc. # 138]. Thus, the matter is ripe.


         Rule 15 of the Federal Rules of Civil Procedure provides that leave to amend shall be “freely” granted “when justice so requires.” Fed.R.Civ.P. 15(a)(2). However, where, as here, amendment is sought after expiration of a court's scheduling order deadline, Rule 15(a)'s liberal standard is inapplicable unless, and until the party seeking leave first satisfies the more demanding requirements of Rule 16(b). See Fahim v. Marriott Hotel Services, Inc., 551 F.3d 344, 348 (5th Cir. 2008) (citation omitted).

         I. Rule 16

         Under Rule 16(b), “a schedule may be modified only for good cause and with the judge's consent.” Fed.R.Civ.P. 16(b)(4). To obtain an extension of a scheduling deadline, the requesting party must demonstrate that, despite its diligence, it cannot reasonably meet the deadline. Fahim, supra (citations omitted). The four factors relevant to good cause include, (1) the explanation for the failure to timely move for leave to amend; (2) the importance of the amendment; (3) potential prejudice in allowing the amendment; and (4) the availability of a continuance to cure such prejudice.” Id. (citations and internal quotation marks omitted). The court considers each factor, in turn.

         a) Explanation for Failure to Timely Seek Leave to Amend

         i) Individual Defendants

         Plaintiffs attribute the timing of this motion to the fact that they did not uncover requisite facts to support FLSA claims against the individual defendants until the Blurtons served them with their supplemental discovery responses on May 1, 2019. See M/Leave to Amend, Exh. D. The Blurtons contend that the individual defendants were disclosed as potential witnesses in this case as early as January 2017, in connection with SIMMCO's initial disclosures. Furthermore, on January 9, 2017, in its responses to plaintiffs' first set of discovery, SIMMCO identified Randy Sawdey, David Payne, and Tom Pegram as individuals who supervised plaintiffs. (Defs. Opp., Exh. 1). At that time, SIMMCO also identified Vanessa Carrasco as the person who entered the underlying data for calculating overtime. Id. However, SIMMCO limited its discovery responses to the two original plaintiffs, and expressly excluded persons who might later consent to participate in a collective action, if certified. Id. The Blurtons further argue that plaintiffs themselves should have known who their supervisors were from the suit's inception.

         The court observes that under the FLSA, an “[e]mployer includes any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 U.S.C. § 203(d) (internal quotation marks omitted). The Fifth Circuit uses the “economic reality” test to assess whether there is an employer/employee relationship. Gray v. Powers, 673 F.3d 352, 354-55 (5th Cir.2012) (citations omitted). In order to resolve whether an individual or entity is an employer, the court must consider whether the alleged employer: “(1) possessed the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.” Id. (citation omitted). In cases involving more than one potential employer, the court “must apply the economic realities test to each individual or entity alleged to be an employer and each must satisfy the four part test.” Id. (citation omitted).

         The court is not persuaded that the plaintiffs in this collective action would have had personal knowledge as to all of the foregoing factors for the prospective defendants. Moreover, the court accepts plaintiffs' explanation that they did not obtain additional information to support their claims against the individual information until the Blurtons supplemented their discovery responses on May 1. In fact, the Blurtons contend that plaintiffs still do not allege sufficient facts to assert plausible claims against the individual defendants. See discussion, infra.

         Although not emphasized by plaintiffs, the need to join additional prospective employers beyond SIMMCO and the Blurtons did not crystallize until after SIMMCO filed for bankruptcy, and then earlier this year, when the Blurtons intimated that they did not have money or assets to satisfy a judgment against them. See Email Correspondence; M/Extend Disc. Deadlines, Exh. A. Regardless, plaintiffs promptly filed the instant motion within days after receipt of the supplemental discovery responses.

         ii) The Blurton Group

         The Blurtons argue that plaintiffs could have joined the Blurton Group within the original deadline to amend pleadings because SIMMCO's website consistently documented that SIMMCO was a division of the Blurton Group. Again, however, the need to join the Blurton Group did not crystalize until only a few months ago. See discussion, supra. Moreover, the court appreciates plaintiffs' decision to consolidate its joinder of parties into one motion, which did not ripen until after receipt of supplemental discovery responses regarding the individual defendants.

         iii) SIMMCO II

         Plaintiffs assert that SIMMCO II was not formed until October 1, 2018. See M/Leave to Amend, Exh. C. The Blurtons apparently contend that plaintiffs should have sought leave to amend to join SIMMCO II before now. Of course, neither side did anything in this case after SIMMCO's bankruptcy filing until prompted by the District Court in January ...

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